Inbound Marketing + Sales Blog

February 26, 2018

How To Measure the Performance of Your Paid Ad Campaigns

Written by: Shannon Garvey  |  Share:

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A paid advertising campaign can provide huge value to your company. Paid searches have a high potential to bring more leads to your website and introduce more people to your product or service.

Creating a specific and measurable goal for your paid advertising campaign is important. A clear goal enables you to prove that your efforts were successful and what tactics worked so you can replicate those efforts in the future. Paid advertising is an investment. Therefore, it is important to pay close attention to the status of your campaign to ensure it's on the right track to accomplish your goals.

We've laid out the Key Performance Indicators (KPIs) to measure when launching a paid advertising campaign and how those metrics will help you evaluate and tailor your campaign strategy.

Visibility and Engagement

Let's say your business just released a new product. It's been added to your website, you've sent out emails to your valued customers to tell them about it, but you want to reach an even wider audience.

Your goal for this paid advertisement campaign would be to get your product in front of more people and have those people convert into customers. Measuring visibility and engagement metrics will objectively show if you are meeting your goal of reaching a wider audience.

Metrics to Track:

  • Impressions

Impressions show how many people have seen your ad. Impressions are very clear indicators of success or struggle because they objectively show the visibility of your paid advertisements. A low amount of Impressions indicates that your ad is not reaching many people. A high amount of Impressions shows that your paid ad is meeting your goal of reaching a wide audience.

  • Click rate

The Click Rate shows the number of people who decided to click on your ad to learn more. These people are on their way to converting from visitors into leads.

  • Click-Through Rate

Click-through Rate is different than Click Rate because it's represented by a percentage value. It reveals the amount of people who have seen your ad compared to the amount of people who have decided to click on it. This metric shows the amount of interest your ad receives from the greater population of viewers. A high Click-Through Rate means that your ad is being presented to the right group of personas who find enough value in your ad take the desired action.

Download the Marketing Goals Calculator Template to find out how many leads you  need at each stage of the funnel

Return on Investment

The budget you devote to a paid advertising campaign needs to coincide with the financial opportunity associated with your overall goal. For example, if your goal is to advertise for your new product, then you need to consider how much the product costs compared to how much you're willing to spend on advertising. If your product costs $5,000 and your ad generates one customer for every four leads, then you shouldn't spend more than $5,000 on the ad in a given month.

Running a paid advertising campaign is an investment. As with any investment, measuring ROI is crucial. These metrics will help you objectively determine the revenue contribution of your ad.

Metrics to Track:

  • Cost Per Click

Cost Per Click is the amount your company pays each time someone clicks on your advertisement. Your company should determine a max price they are willing to pay that aligns with the budget strategy you agreed upon.

  • Cost Per Conversion

The Cost Per Conversion rate shows how much your business spent on the ad campaign compared to how many people converted into customers. This metric shows to what percent your investment was paid off, brought in more revenue or did not succeed in breaking even. If the amount you paid is much lower than the percentage of leads that converted into customers, your return on investment will be high. Likewise, if you spent a lot of money on this paid campaign and only a few people converted, then it shows that your return on investment was very low.

  • Average Position

The Average Position ranking is where your ad appears in related search results. To run a paid ad, your company bids for ranking on a keyword (or words) associated with your advertisement. The more you pay over your competitors, the higher in search results your paid advertisement will rank. Average Position also indicates whether your max cost per click will allow you to achieve a competitive position over your keyword competitors. However, when you're running a paid ad, you also have to consider the authority and relevance score of organic search results because they will also be competing for keyword traffic.

How to get back on track

If the above metrics are showing that your paid advertising campaign is not performing well, then it's time to examine a few aspects of your strategy. Many metrics can be improved by updating your ad relevance. Is your ad and the associated keyword clearly linked to your persona's pain points and search queries? If most of your prospects are searching "marketing software that converts" and your ad is linked to "marketing technology," then the right personas might not be able to find it. Changing the keyword associated with the ad might help make it more relevant to your ideal audience.

Likewise if a competitor is paying more than you would like to spend on a common keyword, then switch strategies. You're paying to rank for a specific group of words that are associated with your advertisement and your company, so if you're being outbid on one word, then redeploy your resources. Research other ways to describe your services and integrate them into your advertisement and content marketing strategy. You will spend less money driving organic traffic to your site and see a higher return on your marketing investment against your competition.

When using paid advertising campaigns, reporting and checking on these key performance indicators will show you if you are on track to accomplish your business goals. For more help setting clear and attainable marketing goals, download our Marketing Goals Template Calculator below.

marketing-goals-template

Topics: Demand Generation, Featured, Reporting & ROI, SEO & Paid Search

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